South Korea’s central bank raised its policy interest rate on Friday for the first time in a year at a widely anticipated move aimed mainly in comprising a boom in areas of the nation’s property market.
The Bank of Korea‘s monetary policy committee raised the base rate, which applies to its seven-day repurchase deal deals, by 25 basis points to 1.75 percent, a media at the central bank said without elaborating.
Governor Lee Ju-yeol is supposed to hold a news conference beginning at 0220 GMT. Analysts said heightened international markets chaos over the last few months has made it hard for the BOK to discover the ideal time to correct policy.
“Given that the international uncertainties that we have had of late, I believe that the central bank picked the ideal time-tested, “said Kong Dong-rak, strategist at Daishin Securities, adding that the central bank could probably keep the speed on hold during next year.
Market response to the widely anticipated move was small as investors anticipate additional comments in the Senate for guidance on future policy management.
As of 0126 GMT, the Seoul stock market’s KOSPI was down 0.1 per cent on the afternoon while the front-month 3-year treasury bond futures were down 0.03 points.
The conclusion, steered by 15 from 16 economists in a Reuters poll, marked the initial tightening in coverage since November this past year and introduced the standard rate to its greatest level because of mid-2015.
Policymakers are worried about a land boom in the Seoul region and a surge in consumer fund, prompting various real estate limitations.
However, analysts expect the central bank to stay pat throughout next year together with all the national property market currently cooling in a time when Asia’s fourth-largest market is slowing and inflation stays low.